Exporters have been complaining bitterly about the impact of the hardening rupee on exports. At the macro level, the export data clearly bring out the deceleration in rupee earnings.

How have exporters performed during the September quarter? To answer that question, we looked at a sample of companies with a net annual turnover of Rs100 crore and more and whose net exports are at least a third of their net sales.

As the chart shows, the slowdown in sales and profits growth for this sample of 140 companies is very clear. Growth in net sales (year-on-year) has come down from 25.83% in the March quarter, to 13.51% in the September quarter. Growth in operating profit has not only slowed, it also slipped into negative territory in the September quarter.

Within this sample, three major sectors stand out as being the most affected. The 29 software companies in the sample showed a slowdown in year-on-year net sales growth: from 30.7% in the March quarter, to 20.8% in the September quarter. Growth in profits after tax (PAT) dipped from 54.3% in the March quarter, to 17.9% in the September quarter.

For pharma companies, the change has been much more stark. PAT of the 15 pharma companies in the sample increased 112.6% in the March quarter, decelerated to 37.5% in the June quarter and then slipped to a negative 2.5% in the September quarter. As for the 36 textile companies in the sample, although net sales growth has slipped, from 29.7% in the March quarter, to 19.6% in the September quarter, PAT growth has been consistently negative.

PAT growth was a negative 39.4% in the March quarter and a negative 37.3% in the September quarter. The implication seems to be that there’s more than rupee appreciation that is wrong with the textile sector.


Vodafone Group Plc.’s entry into the Indian market has delivered quick results for the telecom major. To start with, average monthly customer additions have jumped nearly 50% to 1.58 million since it took over from Hutchinson Essar Ltd in May.

In the preceding six months, monthly customer adds had averaged 1.07 million. As a result, Vodafone’s share of the global system for mobile communications (GSM) industry’s net additions has risen to 27.8% between May and October, from just 21.6% in the preceding six months.

While bundled packages with pre-paid talk plans and low-cost handsets have aided growth, the company has also been aggressively expanding its distribution. In the 16 circles that Vodafone operates, market leader Bharti Airtel Ltd’s net customer adds were just 1% higher at 1.6 million between May and October. In the preceding six months prior to Vodafone’s entry, Bharti’s customer adds in common circles were 21% higher at 1.3 million. While this points to increased aggression in acquiring new customers, Vodafone’s financial results for the six months until September show that profitability hasn’t been affected.

Earnings before interest, taxes, depreciation and amortization (Ebitda) margin of the Indian operations was maintained at pre-acquisition level of 34%. What’s more, while the huge £170 million (Rs1,369 crore) amortization of intangible assets associated with the Indian acquisition resulted in a net loss from the Indian operations, the impact was lower than what Vodafone had envisaged at the time of the acquisition.

The company had told investors that the Indian acquisition would dilute earnings because of the large amortization charge, and would impact overall earnings by about 7%. The results for the first-half period show that the impact was slightly lower. And this was despite a hefty 14% year-on-year drop in average revenue per user (Arpu) during the September quarter (data for the June quarter are not available since Vodafone got control only on 8 May).

The drop in Vodafone’s Arpu in India is roughly in line with its counterparts, and a result of the increase in proportion of low-income subscribers.

Some Indian telecom analysts are worried that the erosion in Arpu is happening at a rate faster than anticipated.

Vodafone’s has gone for high customer additions to offset falling Arpus. With its stock quoting near six-year highs, its investors are alright with the argument.

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